Africa-Press – South-Africa. The National Treasury says it will not be responding to reports about an apparent cash crunch it finds itself in – a few weeks before Finance Minister Enoch Godongwana tables his medium-term budget policy statement.
The Sunday Times reported that President Cyril Ramaphosa held secret, marathon meetings with ministers, including Godongwana, at the Spier Wine Farm in Stellenbosch this week.
At the heart of the meetings was a proposal to increase VAT or shut several government programmes to get a grip on runaway spending in a way that sustains the R350 Social Relief of Distress (SRD) grant beyond election year in 2024.
Provincial allocations and labour salaries could be affected as the government plans a R950 million charge from the national revenue fund.
The newspaper also reported that Godongwana’s department had drafted proposals to reduce government departments and entities to curb spending.
Godongwana’s Budget speech earlier this year had been widely criticised for failing to come up with a definitive SRD plan, despite the minister having previously committed to report back to Parliament with a tangible plan.
According to the report, this is how the government plans to proverbially rob Peter to pay Paul.
The Treasury is said to have put forward:
The proposals should raise eyebrows as they precede Godongwana’s mini-budget speech, which has been delayed by a week, in November.
Approached for comment, National Treasury spokesperson Cleopatra Mosana said: “Please note, National Treasury will not be issuing a statement on the Sunday Times’ stories.”
Meanwhile, DA spokesperson on finance, Dion George, said his party had raised concern that there had been no provision in the February 2022-23 Budget speech for an extension of the SRD beyond 2024.
George said: “In response, government stated that a revised social security model was being designed, followed by silence. This meeting may well be part of a desperate scramble to find money to fund an extension of the grant and also to plug the massive gap between projected revenue and actual revenue.
“The simple fact is that government has run out of money and cannot fund items budgeted in February, let alone the SRD.”
George said the root cause of the crisis is “tepid” economic growth.
“This is a direct result of failed economic policy and poor fiscal choices, such as positioning government in the wrong place in the economy; a bloated Cabinet; a proliferation of agencies that are nothing more than expensive employment agencies for ANC cadres; keeping hopelessly bankrupt state-owned enterprises (SOEs) barely afloat; an energy crisis that has significantly disrupted the ability of business to function and systemic corruption that has led to greylisting and driven out business confidence and deterred local and foreign investment. The list goes on,” George said.
He said the government had failed to make the hard choices needed to keep the country “financially afloat”.
“Cutting expenditure on the periphery won’t work. Offering early retirement to public sector employees and cutting back on visible policing and other essential services won’t make any difference. Cutting the size of the bloated Cabinet would be a positive step, and that would need to include slimming the public service of the overpaid, underproductive management layers and not overworked front-line service providers,” George said.
George said:
He said Godongwana “has nowhere to turn” and had to cut expenditure to fund the SRD’s extension.
“Something will need to change and the best solution for South Africa would be a new government that can start the process of turning our battered economy around, before it is too late. The DA will present our alternative MTBPS (medium-term budget policy statement) that will set out how a DA government would tackle the current, untenable, situation,” George said.
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